- Mandates for firm’s ‘tech agnostic’ solution to help clients navigate IBOR transition
- Banks’ preparations continue apace, despite COVID-19
Despite the COVID-19 related challenges facing financial institutions (FIs) worldwide, lawyers at global law firm Norton Rose Fulbright say the transition away from LIBOR must remain a top priority for FIs to avoid the risk of falling behind or falling foul of regulatory scrutiny.
The FCA and PRA confirmed earlier this month that the timeline for transitioning away from LIBOR as a benchmark remains in place despite COVID-19. This means plans are still on track for the rate to be phased out completely by the end of 2021, with a number of milestones in relation to Sterling being extended to the end of Q1 2021. As a result, work on the lengthy and complex contract repapering and risk mitigation exercise each FI has to undertake must continue without delay.
Norton Rose Fulbright has taken a distinctive “tech agnostic” approach to offering an end-to-end IBOR transition service, supporting clients by streamlining the process of transitioning banking agreements away from LIBOR. This firm has also engaged early with in-house IBOR transition teams to better understand their project delivery challenges and priorities, and share insight on how these are being addressed across the market, as well as providing guidance on legal and regulatory issues.
Rather than partner with specific technology providers, the firm completed an in-depth benchmarking exercise confirming the best tools across the market for each phase of the project. The developed solution has a consistent design based on five modules, but each component can be supported by different technologies, allowing the solution to be flexed to meet different needs. For example, six AI / machine learning tools were reviewed to support the due diligence phase, and any of these tools can be used in the solution. Some are pre-approved by different FIs, have ready integrations with other elements of FIs’ technology suite, or are better suited to the document set the relevant FI needs to review.
The firm’s early engagement and close collaboration with in-house IBOR transition teams across the market has given insight into the impact COVID-19 has had on IBOR transition. While some institutions paused for a few weeks during the first phase of lockdowns, that period of inactivity has rapidly passed. Most institutions are now proceeding with internal plans apace, in markets across the Americas, Europe, Asia and Australia. For Norton Rose Fulbright, this has culminated in remediation mandates being awarded by two global banks and one Asian bank in the last three weeks.
Davide Barzilai, a London-based partner and head of the firm’s global IBOR Transition team, comments:
“With the timeline for LIBOR transition showing no sign of shifting, financial institutions feel added urgency in their preparations to meet the FCA deadlines. We are working alongside the LIBOR transition project teams within FIs to help them design and deliver an approach that balances their business and commercial objectives with the huge volume of work involved.
“We focus on using the right technology for the right task throughout the sorting, due diligence, and amendment phases of a project, to speed up and de-risk large-scale contract reviews and amendment. Having a close understanding of in-house teams’ project delivery challenges and priorities means we can discuss the range of technology tools we reviewed and offer different solutions to suit different needs. This has proved a major differentiator. We also harness efficiencies gained by using project management best practice, with a truly global and multidisciplinary team comprising leaders in technology, regulatory and compliance alongside market-leading legal experience”
David Carter, chief product officer and lead on the firm’s global change and innovation programme, NRF Transform, comments:
“Our IBOR transition service is the most recent and sophisticated solution developed by NRF Transform. When bringing new skillsets into a law firm, you need a level of mutual understanding to make integrating them effective: Partners who understand structured data, and solutions architects & developers who understand lawyers’ working patterns. Building a truly multidisciplinary team has been a long process, internally and with clients, and it’s thrilling to see it bear fruit.
“Being tech-agnostic on IBOR transition was a big decision, meaning more upfront design work. But it is proving a good investment in the efficiencies and customization we can offer our clients, ultimately giving them a better-suited solution than if we had only partnered with one technology provider.”